Why now is not the time to skimp on home maintenance
Are you one of the lucky South Africans that received an annual salary increase in the last year? Chances are that even if this is the case you are now, on average, R200 poorer than you were two years ago.
According to a BankservAfrica survey the average nominal disposable income in January 2015 was R12,808 compared to R11,506 in real terms. In December 2016, Bankserv’s data showed nominal salaries had increased to R14,102 a month, but in real terms actually decreased to R11,309. Dr Caroline Belrose, head of information services at BankservAfrica, said the 1.5% decline is likely to put consumers under increasing pressure resulting in reduced expenditure on items such as cars, homes and furniture.
Dawn Bloch, area specialist for Lew Geffen Sotheby’s International Realty in Zwaanswyk, Lakeside and Kirstenhof, says that even in stronger markets consumers are feeling the pinch and many homeowners are considering extending the timeframes or overlooking small repairs when it comes to regular home maintenance requirements.
How bad is it?
John Loos, household and property sector strategist at FNB home loans, confirms that there has been slight recent deterioration in levels of home maintenance and upgrades. A recent survey of a sample of estate agents showed that the percentage of homeowners attending to basic maintenance only – a level which in effect means the home will go backward over time – was 12% for the two quarters up to the second quarter of 2017, which is a rise from 9.5% in the first quarter of 2017. While those homeowners allowing their homes to get run down remain insignificant at 1% – up from 0.5% in the previous quarter.
“Given the recent recessionary conditions, it would be realistic to expect some decline in the level of costly value adding upgrades,” explains Loos. “However, our sample of estate agents surveyed has not seen the onset of such a decline.”
The survey showed that there has been only a slight decline in homeowners maintaining and making some improvements, from 36.5% for the latter half of 2016 and the first quarter of 2017, to 35.5% in the second quarter. The percentage of owners not improving but still fully maintaining homes has also declined, from 27.5% in the first quarter of 2017 to 25.5% in the second quarter.
Loos says that looking at growth in retail sales by hardware, paint and glass product retails supports this view of declining maintenance activities. “Using a three-month moving average for smoothing purposes, this category of real retail sales declined slightly by -1% year-on-year for the three months to April 2017, and -1.6% year-on-year in April alone. This represents a slowdown from +2.7% three-month moving average in November last year.”
While the situation remains better than 2008/9 recession levels, a recently renewed recessionary environment and weak consumer confidence levels could be expected to lead to greater household spending caution and further declining levels of household spending and subsequently lower levels of home maintenance and upgrades, on average.
Why home maintenance is not the budget item to trim
According to Bloch it is really quite simple – if your home needs the most work it will remain on the market the longest should you decide to sell.
“Buyers generally prefer homes that are immediately habitable, or at least ones that don’t need extensive renovations and repairs,” she adds. “If you let maintenance slide, when you do decide to sell you could be in for a shock at the cost of making all the necessary repairs.”
Sandy Geffen, executive director of Lew Geffen Sotheby’s International Realty in South Africa, says that homeowners who regularly invest in maintenance and repairs will save money in the long run, even if they don’t sell. It is always best, and most budget friendly, to regularly service and timeously replace – do the “smaller jobs” rather than waiting for the big disasters such as a burst geyser or an entire gutter system falling off.